One in six VLCCs has carried Iranian or Venezuelan oil over the past two years

One in six VLCCs currently trading have carried oil from sanctions-hit Venezuela and Iran over the past 24 months, new research shows, underscoring how large the illicit oil shipment business has become during what has been one of the worst earnings periods for tankers in a generation.

Of the 853 VLCCs currently afloat, 141 have been used in the illicit Iran and Venezuela oil trades over the past two years, according to data from TankerTrackers.com, an independent online service that tracks and reports shipments of crude oil in several geographical and geopolitical points of interest.

Many ageing tankers with limited trading opportunities have moved into sanctioned Iranian and/or Venezuelan trade during the pandemic.

Analysis from tanker brokers Gibson in May suggested up to 10% and 6% of the VLCC and suezmax fleets respectively are involved in sanctions-busting activity.

Braemar ACM has pointed out in a recent report that when US sanctions on Iran’s oil industry are eased, likely soon, the carriage of Iranian crude will once again be largely covered by NITC tankers which will see employment for the illicit fleet dry up. Some of these units could switch to carrying Venezuelan oil. However, these units should be few and far between as Braemar ACM anticipates little upside to Venezuelan crude production over the short-term.

“The upshot is that considering the elderly age of the ‘illicit’ fleet, the majority of units should be scrapped within one year of US sanctions being eased,” Braemar ACM predicted earlier this month, adding: “However, we project minimal upside to rates coming from such scrapping. As with this year, the tankers undertaking illicit voyages are already removed from the general hire pool.”